PROFITABILITY: THROUGH PERFORMANCE MANAGEMENT AND MEASUREMENT.
What is described herein involves both employers and employees and as such they should recognize the benefits of a performance management and measurement system whether it currently exists or not.
For companies to achieve profitability on an ongoing basis it is recommended to establish a performance management and measurement system which is a process whereby the work performance of all individuals in an organization can be informally evaluated on an ongoing basis. The objectives of such a performance management and measurement system would include the establishing of standards for quality and quantity of work with a weekly, monthly, and annual formal review of each individual’s performance, and the organization as a whole. Encouraging individuals to continually analyze their own performance and to set personal performance standards and goals would provide further incentive to work towards achieving sustainable profitability. There should also be a process of identifying specific requirements for the training and development of individuals, and recording on an objective basis, the work performance of each individual, which should greatly enhance the probability of success of sustained profitability.
A performance management and measurement system is an ongoing activity and as such overseeing the implementation, maintenance, effectiveness, and recommending necessary additions, deletions, or modifications to the performance management and measurement system will be necessary. The success of a performance management and measurement system also requires the reviewing of duties, responsibilities, standards and/or measures of performance pertaining to an individual’s position including previous performance of individuals, productivity and quality control, and reports of project results, or other work products generated previously by individuals. Opinions of individuals play an essential part in the establishment and evolution of a performance management and measurement system and should be as objective as possible.
Included in the performance management and measurement system could be a Key Performance Indicators (KPI’s) structure. KPI’s are objective evidence of the degree to which a performance result is happening over time; they are feedback about the progress in improving aspects in business. Regular and objective feedback about progress in pursuing profitability is essential with good performance measures and making the right decisions at the right times to pursue results and avoid unnecessary waste of commodities. All too often goals are erroneously envisaged as results when in fact this is not true since to get from a goal to a result involves processes and if not monitored and measured may lead to different outcomes and possibly not making profit. Establish KPI’s so that measurements can be made along the way to achieve the results required by using graphs to track progress which are a good method of displaying this information.
The principles of getting started with a performance management and measurement system is to keep it simple, relevant and make an impact, and identify the objectives which will drive towards profitability. When starting with a performance management and measurement system, it is more important to learn the correct mechanics of measuring that matter; it is far less important to measure everything or get everyone involved right up front. Only ever measure that which truly matters in helping pursue and achieve the goals or results for the business and profitability. And be mindful that a performance management and measurement system is only as good as the individuals involved.
About the Author:
Anthony Dew is an Associate Director of Mood Group – A specialist Head-hunting and Recruitment practice to the Printing, Packaging & Industrial Processing sectors.